The High Court, under Justice Nana Brew, rejected a judicial review application filed by George Smith-Graham, a former director of UMB Bank, against the Bank of Ghana (BoG).This ruling was issued on July 10, 2024.

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In delivering the judgment in favor of the BoG, the Court noted that the aim of the Banks and Specialized Deposit-Taking Institutions Act, Act 930, and the Corporate Governance Directive 2018, is to strengthen the Bank's supervisory powers to maintain order in the banking sector.

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The Court highlighted that it considered Section 102 of Act 930 and concluded that this section grants the BoG broad authority to address any violations of its laws and regulations by banks and specialized deposit-taking institutions, allowing the BoG to act upon receiving information about such breaches.

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The Court held that the Applicant's argument that the BoG could not remove a bank director who had violated its laws without first granting a hearing was untenable. The Court further explained that Section 102 (3) of Act 930 includes the removal of a director as a permissible remedial action by the BoG.

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Additionally, the Court found that correspondence between the parties indicated that the BoG had provided the Applicant and UMB with an opportunity to be heard. The Court believed that the Applicant, who served as both a director and Chairperson of UMB, could not claim ignorance of the communications exchanged between the parties.

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Finally, the Court ruled that the Companies Act, 2019 (Act 992), does not limit the extensive powers granted to the BoG under Act 930 to address breaches of its directives. The Court emphasized that Act 930, which specifically governs the conduct of banks, overrides the general provisions of Act 992 concerning the removal of directors by the BoG.

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Therefore, the Court dismissed the application, deeming it unmeritorious, and found that the Applicant had failed to demonstrate that the BoG's power was exercised corruptly, with malicious intent, or in an irrational, capricious, and unreasonable manner.

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BackgroundOn 22nd July 2022, the BoG, pursuant to its powers, under the Banks and Specialised Deposit-Taking Institutions Act, Act 930 and the Corporate Governance Directive 2018, issued a directive on the appointment and redesignation of directors and key management personnel.

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This required all commercial banks [including Universal Merchant Bank Ltd (UMB)] to obtain a prior written “No Objection” from BoG before redesignating an existing non-executive director to any other position.UMB on 5th July 2023 purported to appoint Mr. Smith-Graham (a non-executive director) as its board chair at an emergency meeting of its Board.

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UMB did not comply with the BoG’s Directive of July 2022 by failing to obtain BoG’s prior written “No Objection” to the purported appointment.The BoG informed UMB about its violation of the Directive and instructed UMB to seek the BoG's "No Objection" for appointing Mr. Smith-Graham as its Board Chair. UMB responded by stating that their lawyers advised them that they did not need BoG's "No Objection" to appoint Mr.

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Smith-Graham as Board Chair, so they would not seek such approval. Due to UMB's refusal, the BoG used its powers under the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930), to revoke its approval of Mr. Smith-Graham's appointment as UMB's director.Unhappy with the BoG's decision, Mr. Smith-Graham (Applicant) filed an application for judicial review of the revocation of his appointment as a director.

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The Applicant argued that the BoG's power under Section 102 of Act 930 did not include the authority to revoke his appointment as a director of UMB Bank. He further claimed that even if the BoG had the authority to revoke his appointment, it was legally required to give him a hearing. The BoG, however, asserted that it had the power to revoke the Applicant's appointment under Section 102 of Act 930.

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The Court had to determine whether the BoG could revoke the Applicant's appointment under Section 102 of Act 930 based on information obtained through its own investigations.

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